NRI Investment

Ridhiraj Builders understands the importance of NRIs needs and emotions hence we have created an exclusive help desk for the NRIs. shortly we will have representations around the globe give our services in major cities. In certain projects NRIs have made major investements and have yeilded good returns on their investement.

As per our legal experts we have attempted to answer ceratin NRI specific querries, however should you have any querry to make kindly register same in our FAQ section for our prompt response:

FAQ

Can an NRI/ a PIO purchase immovable property in India without permission from Reserve Bank?
Reserve Bank has accorded general permission to purchase only a residential/commercial property in India to an NRI/ a PIO. No forms or returns are required to be submitted to Reserve Bank after purchase of such property. Neither there is any restriction on number of residential/commercial property that NRI/PIO can purchase under general permission available.
Can an NRI/ a PIO rent out his immovable property in India?
An NRI or a PIO is free to rent out their immovable property in India without permission from RBI,, The rental income received by such rent out shall be regarded as a current account transaction hence is freely repatriable outside India, subject to payment of applicable taxes.
In this connection, it may be noted that even a person being citizen of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal or Bhutan can acquire or transfer property in India on Lease not exceeding 5 years, without prior permission from RBI.
Can an NRI repatriate the rentals if the concerned property is held on non-repatriation basis?
The rental income received by such rent out being current account transaction can be repatriated abroad or be credited to repatriable non-resident accounts, subject to payment of applicable taxes.
In which cases prior permission of RBI is required to acquire or transfer immovable property in India and under what circumstances such permission is required?
The following categories of persons are required to obtain prior permission of RBI to acquire or transfer immovable property in India:-
Sr. No. Person who is required to obtain RBIs Permission Nature of Transaction/ property which requires RBIs permission Reference/
1. Citizen of India residing outside India (i.e. NRI)
To acquire agricultural or plantation property or a farm house in India
Reg. 3(a)
2. Citizen of India residing outside India (i.e. NRI) To transfer agricultural or plantation property or a farm house in India to another NRI or PIO
Reg. 3(c)
3. Citizen of India residing outside India (i.e. NRI) To transfer any immovable property in India to a person resident outside India of non-Indian Origin (i.e. other than to another NRI or PIO)
Reg. 3(b) & (c)
4. A person of Indian origin resident outside India (PIO) To acquire any immovable property in India (other than agricultural or plantation property or a farm house) by way of purchases from other than foreign exchange funds/ non-resident accounts
Reg. 4(a)
5. A person of Indian origin resident outside India (PIO) To acquire agricultural or plantation property or a farm house by way of purchase or gift (other than by way of inheritance)
Reg. 4(a) & (b)
6. A person of Indian origin resident outside India (PIO) To acquire any immovable property in India (other than agricultural or plantation property or a farm house) by way of gift from a foreign national resident outside India (other than another NRI or PIO)
Reg. 4(b)
7. A person of Indian origin resident outside India (PIO) To acquire agricultural or plantation property or a farm house by way of gift or sale to another NRI or PIO (other than a person who is a citizen of India and resident of India) Reg. 4(e)
8. A person of Indian origin resident outside India (PIO) To transfer any immovable property in India by way of a sale to a person resident outside India. Reg. 4(d)
9. A person of Indian origin resident outside India (PIO) To transfer any residential or commercial property in India by way of gift to person resident outside India (other than another NRI or PIO) Reg. 4(f)
10. A person resident outside India who has been permitted to establish a branch, office or any other place of business in India (excluding a liaison office) To transfer any property in India (other than by way of mortgage to an Authorised Dealer as a security for any borrowing). Reg. 5(b)
11. Foreign Embassy, Diplomat, Consulate General To obtain prior approval of Govt. of India, Ministry of External Affairs for purchase & sale of IP Reg. 5A
12. A foreign national being a citizen of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal or Bhutan (whether resident in India or not) To acquire or transfer any immovable property in India (other than lease not exceeding 5 years) Reg. 7
13. Any person resident outside India (other than an NRI or a PIO) i.e. any foreign national resident outside India. To transfer any immovable property in India. (Note: The regulations do not grant any general permission to such a person to acquire an immovable property in India. Therefore, such a person would also require RBIs permission to acquire an immovable property in India). Reg. 8
14. Any Non-individual person (i.e. a company or a firm etc.) resident outside India. To acquire or transfer an immovable property in India (other than a lease not exceeding 5 years). Sec. 6(3)(i)
It will be thus apparent from the above that all transactions involving acquisition or transfer of immovable property in India by a person residing outside India (as well as by certain persons who are citizens of certain neighboring countries) require prior permission from RBI unless general permission had already been secured/ granted for such a transaction in terms of regulations 3, 4 or 5 of the said Regulations.
Can NRIs purchase immovable properties out of NRO accounts?
NRIs are free to purchase immovable properties out of NRO accounts. But there is a restriction upon repatriating the sale proceeds of such properties, NRIs can repatriate sale proceeds upto USD 1 million out of NRO account for property held for more than 10 years.
How much part of consideration, can NRI repatriate, upon the sale of his property?
India is fully convertible on current account and partial on capital account. Remittance of sale proceed is limited to the cost of the property only, and the amount of gain on sale of property, cannot be repatriated.
Can an NRI borrow from Housing Finance Institutions for purchase of property in India?
RBI has granted general permission to Authorized dealers, and Housing Finance Institutions (e.g. HDFC, LIC Housing Finance Ltd.) approved by the National Housing Bank to lend NR Indian citizens to buy residential property for self occupation subject to certain terms and conditions. Hence, Non-resident Indian Citizens can buy property in India out of borrowed funds.
RBI has also vide its Circular No.95, dated 26th April 2003, grated authorized dealers or housing finance institution in India approved by the national Housing Bank to grant housing loans to NRIs/ PIOs in rupees for renovation/ repairs/ improvement to residential accommodation owned by them.
Can an NRI take loan against the security of immovable property in India? Are there any restrictions on the use of loan amount?
An NRI can borrow against the security of immovable property from authorized Dealer subject to following conditions:
a) the loan should be used for meeting the personal requirements or for borrower own business purposes; and
b) loan should not be used for prohibited activities, namely;
i) business of chit fund, or
ii) Nidhi Company, or
iii) Agricultural or plantation activities or in real estate businesses, or construction of farm houses, or
iv) Trading in transferable development rights (TDRs),
c) The loan amount cannot be remitted outside India.
d) Repayment of loan shall be made from out of remittances from abroad or by debit to NRE/FCNR/NRO/NRSR/NRNR account or out of the sale
proceeds of shares or securities or immovable property against which such loan was granted.
What is the definition of Person of Indian Origin (PIO)?
Person of Indian Origin has been defined in section 2(c) of Foreign Exchange Management (acquisition and Transfer of immovable property in India) regulations 2000. A PIO means an individual (not being a citizen of Pakistan or Bangladesh or Sri Lanka or Afghanistan or China or Iran or Nepal or Bhutan), who
(i) at any time, held Indian passport; or
(ii) who or either of whose father or grandfather was a citizen of India by virtue of the constitution of India or the Citizenship Act,1955 (57 of 1955).
Can a foreign national of non-Indian origin resident outside India acquire any immovable property in India by way of purchase or lease?
No. Under section 2(z)(e) of the Foreign exchange Management Act, 1999 transfer includes among others, purchase. Therefore, a foreign national of non-Indian origin resident outside India cannot acquire any immovable property in India by way of purchase. Neither can a name of a foreign national of non-Indian origin be added as a joint holder to a residential/commercial property purchased by NRI/PIO.
However, a foreign national of non-Indian origin including a citizen of Pakistan or Bangladesh or Sri Lanka or Afghanistan or China or Iran or Nepal or Bhutan may acquire only residential accommodation on lease, not exceeding five years for which he/she does not require prior permission of Reserve Bank of India.
Can a foreign national of non-Indian origin resident outside India transfer by way of sale agricultural land/ plantation property/farm house acquired by him in India?
Yes, A foreign national of non-Indian origin resident outside India can transfer, by way of sale, agricultural land/ plantation property/farm house acquired in India, but for that he would need to seek prior approval of Reserve Bank.
Who all are allowed, to purchase an immovable property held by NRI, under general permission given by RBI?
Under general permission given by RBI, an NRI is allowed to sale his residential/ commercial property in India to a person resident in India or to a NRI or a PIO.
How can a PIO transfer by way of sale his residential/ commercial property to an NRI or a PIO?
An PIO can sell his residential/ commercial property in India to a NRI or a PIO after prior approval of RBI.
What mode of payment is permissible, for purchase of residential/ commercial property in India by NRI/PIO, under general permission?
Under the general permission available NRI/PIO may purchase residential/ commercial property in India only out of funds remitted to India through normal banking channel or funds held in his NRE/FCNR(B)/NRO account. No consideration shall be paid outside India.
Where Can the regulations related to, NRI availing housing loan in rupees from his employer in India, be found?
Under the general permission available NRI/PIO may purchase residential/ commercial property in India only out of funds remitted to India through normal banking channel or funds held in his NRE/FCNR(B)/NRO account. No consideration shall be paid outside India.
NRI wants to repatriate the sale proceeds of the residential property which was purchased by availing rupee loan and the loan was repaid by inward remittance / debit to NRE/FCNR(B) account. Can it be done?
Yes. Loan repayment in foreign currency is treated as equivalent to the foreign exchange received for purchase of residential accommodation.
NRI wants to sell the commercial / residential property which was purchased by inward remittance / debit to NRE/FCNR(B) account. Is there any lock-in period for the same?
No lock-in-period is applicable for sale of such property.
What is the number of house property, purchased by NRI/PIO out of funds remitted through normal banking channel or funds held in his NRE/FCNR (B) account, sale proceed of which may repatriated?
Repatriation of sale proceeds of properties so acquired can not be done for more than two residential properties.
Into which account the sale proceeds of residential/commercial property received by way of gift by NRI/PIO can be credited?
The sale proceed of residential/commercial property received by way of gift by NRI/PIO can be credited.
How can sale proceed of residential/commercial property received by way of inheritance by NRI/PIO be remitted abroad? And what is the quantum?
Yes, sale proceed of residential/commercial property received by way of inheritance by NRI/PIO be remitted abroad. Such amount should not exceed USD one million, per calendar year, only on furnishing of:
(i) documentary evidence in support of inheritance and
(ii)Tax clearance certificate/ no objection certificate from Income Tax authority
to authorised dealer for remittances Provided, a citizen of Pakistan or Bangladesh or Sri Lanka or Afghanistan or China or Iran shall seek prior approval of Reserve Bank with: (i) documentary evidence in support of inheritance and
(ii)Tax clearance certificate/ no objection certificate from Income Tax authority Such amount can not be remitted by a citizen of Nepal or Bhutan.
How can a person resident outside India acquire immovable property for carrying on in India any activity in accordance with FERA/FEMA regulations?
Yes, a person resident outside India acquire immovable property for carrying on in India any activity in accordance with FERA/FEMA regulations by establishing a branch office or other places of business. Provided
(i) it is necessary for or incidental to carrying on such activity.
(ii) all applicable laws, rules, regulations or directions are dully complied with.
(iii) the purchase price is paid by way of inward remittance through proper banking channel.
(iv) a declaration Form IPI should be filed with Reserve Bank within ninety days from the acquisition of such property.
Can sale proceeds of such property be repatriated?
On winding up of the business such property may be disposed off and such sale proceeds may be repatriated with prior approval of Reserve Bank.
A person resident in India acquired immovable property viz., residential/commercial property/ agricultural land/ plantation property/farm house in India, now he has acquired NRI/PIO status, can he continue to hold such property?
As per Section 6(5) of the Foreign Exchange Management Act, 1999 NRI/PIO who had acquired immovable property in India while he was a person resident in India may continue to hold such property. And then he may transfer it by way of sales or gift to a person resident in India or NRI or PIO and the sale proceeds of which may be credited to NRO account.
However, if a PIO is a citizen of Pakistan or Bangladesh or Sri Lanka or Afghanistan or China or Iran or Nepal or Bhutan he should seek prior approval of Reserve Bank for such transfer.
Can such sale proceeds of the immovable property referred above credited to NRO account of NRI/PIO, be remitted abroad?
Such amount may be remitted abroad provided such property was held for a period not less than ten years.
What is meant by a person resident in India?
A person resident in India means a person residing in India for more than one hundred eighty two days during the course of the preceding financial year and who has come to or stays in India either for taking up employment, carrying on business or vocation in India or for any other purpose, that would indicate his intention to stay in India for an uncertain period.
Does a foreign national resident in India require approval of RBI to purchase any immovable property in India?
No, he doesn t require any approval from Reserve Bank however, approvals may be required in terms of regulations prescribed by other authorities will have to be obtained.